Madwell is in financial trouble, delays payments to vendors and employees

Ad agency Madwell is undergoing serious financial struggles, Ad Age has learned. Earlier this week, Ad Age named Madwell a Comeback Agency of the Year, but new financial troubles have since emerged. The Brooklyn, New York-based agency is behind on payments to multiple vendors, three weeks late on some employee salaries and facing eviction from its Denver office. Additionally, Madwell is embroiled in a lawsuit with Bank of America, which accuses the agency of not paying a $4 million loan that was due last year. Update: Ad Age has since revoked Madwell’s Comeback Agency of the Year recognition based on these recently discovered financial matters. See Letter from the editor: Madwell and Ad Age’s A-List. The agency’s co-founder Chris Sojka, now sole owner of the agency following a lawsuit with co-founder David Eisenman, confirmed that the agency is behind on employee and vendor payments in a statement to Ad Age, and said it was the consequence of a long-running legal and financial dispute between the co-founders that resulted in shortfalls in the company’s finances. “This is an incredibly heartbreaking situation,” Sojka’s statement said, “but it is the culmination of a multi-year journey of complex challenges. Ultimately, these very challenges led up to our dispute with my former partner and subsequent legal settlement. I took sole ownership of the company and I’ll take sole responsibility for the issues it’s experiencing in the present.” Eisenman responded in a statement Thursday night. “Sojka has a well-documented history of making baseless accusations against me and others to deflect blame for his financial issues,” Eisenman said. “I just hope all the employees and vendors receive what they are owed and that the situation is resolved quickly.” The agency hasn’t paid some of its employees this month and is likely going to delay its payments for some employees on March 15, Sojka confirmed. “Unfortunately, some employees continue to experience a delay in their paychecks from the Feb. 28 pay period,” Sojka said in the statement. “We have been communicating regularly along the way, effectuating payments on a rolling basis. I was clear with the agency in February that the issues with liquidity would persist until mid-March.” Employees were given an update on the payroll issue Wednesday. “Unfortunately, the client billings and short-term funding we anticipated for this period did not come through as expected,” Madwell President Gabriela Benitez wrote in a March 12 email to staff viewed by Ad Age. “As a result, we do not have a firm date on when the remaining payroll will be dispersed. Our priority remains paying out what is outstanding—given the current situation, unfortunately, the 3/15 payroll will also likely be delayed.” Payment delays had started dating back to July, according to multiple sources. The delays had started at one or two days but gradually increased to nearly three weeks currently. Issues with paying rent for the Denver office were referenced in a Jan. 27 Slack employee group chat with Sojka. Sources also shared a picture of a payment issue notice from the agency’s landlord posted on the Madwell office’s door around the same time. Rent payment delays were also addressed on March 6 by Benitez on Slack. “We want to let you know that we are aware that the office owner put up a notice on the office,” Benitez wrote. “We had communicated we would be slightly delayed on rent, but per their policy they still have to move forward with those actions to protect the owner and their rights. Apologies for the alarm and inconvenience. We’re working to sort out rent moving forward, so this doesn’t keep happening.” As for vendor payments, one such vendor who asked not to be identified told Ad Age his company was owed $100,000 for more than 10 months. Sojka said the agency is “working closely and transparently with all of our vendors and partners, and we are confident that all payments will be made as quickly as possible.” He added: “I have invested my own personal assets in keeping Madwell viable so that we can maintain continuity of employment and meet our obligations.” In a statement, Sojka credited the financial issues to “complex and costly litigation” in 2024, adding, “In addition, we lost our revolving credit due to irresponsible decisions by the former officers of Madwell. As you know, advertising is an industry where clients often pay on a NET 30, 60, or 90-day basis. Having a credit line allows the agency some latitude to plug shortfalls in cash during these periods and maintain a quarterly approach. As we grew, without available liquid capital to support that growth while paying down various debts accrued by former officers, it created a liquidity trap in the Keynesian sense. Since the ownership consolidation in October, Madwell has had successful conversations with potential banking partners and I expect it to be fully resolved shortly.” In its A-List entry, Madwell reported to Ad Age $58 million in projected 2024 revenue. “We stand 100% by the numbers we submitted,” the agency stated Thursday, adding that they were “verified by an external accounting firm.”

Madwell is in financial trouble, delays payments to vendors and employees

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